Overtime – who should get it?

Today the TUC report that the amount of paid overtime has fallen significantly over the last year. This is not surprising given the depth of the recession. Much of the reduction will have come from reduced output; especially in manufacturing; some will have come from organisations where overtime was reduced to save jobs. Countering this will be situations where job losses result in essential overtime for those remaining.

The working population falls into two groups. Those for whom paid overtime is a regular part of life and those whose monthly pay rarely differs from their basic salary divided by 12. Overtime is a valuable management tool for flexing costs in situations where attendance equals output (manufacturing) or where attendance is a necessity (counter or call centre staff). However, there is a grey area, particularly for office-based jobs, where output is not quantified and allocation of time is down to the individual.

Much administrative and managerial work requires social interaction as well as form-filling and decision-making. The HR Officer who never asks staff how they feel about their work or discuses last night’s football will be seen as aloof and will not understand employee attitudes as they should. But when, at the end of the day, they have to stay on to complete a promised report are they working legitimate overtime or did they spend too long discussing last night’s match? Did they choose the wrong priorities for that day’s many tasks?

Common practice, and the law, require specified hours work but there are many jobs where a day at work may not always equal a day’s work.

Save your local bin man – reacting to the recession

Personnel Today* reports on one local council that is asking staff to work fewer hours, or take unpaid leave, “to help save jobs”. In the same article they quote the CIPD, the CBI and the Bank of England as cautioning (not necessarily referening to this council) that this sort of action may only be delaying redundancies rather than saving jobs. I would add another concern.

By taking this approach the council is implicitly assuming that all its jobs are needed and that as soon as the economy picks up the status quo can resume. If you are manufacturing widgets and orders turn down there will be a fairly simple correlation between orders and production hours. In administration and the public sector the connections are much more complex.

The danger is that, if the economy does not pick up as hoped, the council will be forced to make savings quickly. If this happens the cuts will have to be in the larger staff groups. These, of course, are the ones that deliver the ‘real’ services that we all want – refuse collection, gardeners, teachers, etc. – not all those nice-to-have jobs with obscure titles that proliferate across local government. These latter jobs, often resulting from one political pet project or another, are scattered around in smaller groups so any culling inevitably takes longer. To protect real services they need to start reviewing these areas now.

* I’m eternally grateful that this publication has avoided the temptation to become HR Today

Reward & recession

To a CIPD reward forum this week on the topic of “Rewarding in a Recession”. The scene was set by John Philpott of the CIPD with a number of highly depressing going-downhill graphs followed by general advice on how to get value for your non-pay benefits from Mark Eaton of Personal Group. Chris Johnson of Mercer then gave an all-round view of what is happening in larger companies. I will post some more detailed comments at another date but here are four key points that I brought away with me.

Staff turnover in the recession – will they never go?

There are lots of comments and articles around at the moment about what may or may not happen to pay rises over the forthcoming period of possibly-getting-even-worse recession. Several of them consider the topic of how to retain staff/key staff/best-performing staff in the event of a pay freeze or, possibly, pay reduction. My suspicion is that, for the most part, the problem will not arise until the economy starts to recover. So no need to panic yet.

Why? Well three reasons. Firstly, there will not be as many opportunities out there for them to move to. Secondly, moving is much riskier in the current climate. Assessing the risks at a potential employer is much harder than for your current one and if you do think your current one at risk do you want to miss out on the redundancy cheque by leaving. Finally, the competitive imperative to keep up by jumping ship will reduce as everyone else bunkers down. I am old enough to have been working in front-line personnel (note to younger readers: that’s what we called HR in those days) during the Wilson-Callaghan years of incomes polices and £6 per week maximum rises. Then too the doom-mongers predicted a surge in staff turnover. It did not materialise and, in spite of raging inflation, turnover seemed to reduce. My personal theory for this was that the government-imposed rises removed any feelings of inadequacy when your neighbour won a bigger rise than you. They mostly did not and people could just stay in their comfort zone without feeling inadequate.

‘Crunched’ – pay & reward in the recession

I have just booked for a seminar that will consider the role of reward practices during the recession. It promises to focus on working out how much you are really spending and how to get maximum ‘bang for your buck’. I look forward to posting some comments after the meeting. The attendance at these seminars tends to be a mix of people from public, private and not-for-profit organisations (plus consultants, of course) and it will be interesting to find how these different sectors are reacting to the new economic environment.

It will also be interesting to see how much things have moved on by the end of March, when the seminar will be held. I have the feeling that, in some sectors, realisation that there will not be much money to go round is dawning only slowly. One straw in the wind is a survey by Smith & Williamson. Back in the summer they surveyed housing associations and, among their findings, was the expectation that 2009 salary increases would average 3.5%. At the end of January they, very sensibly, undertook a quick update by email and found the average expected increase had dropped to 2.5%. Will it even be at that level by April 1^st (a typical pay review date in this sector)?